The price of Bitcoin is surging towards $13,000, having almost doubled in value since the start of the month.
Bitcoin fell below the $4,000 mark in February, leaving many questioning whether the digital currency was on its last legs. However, following a month of gains, sentiment is now far more positive, with many predicting that the Bitcoin price could soon be back above the $19,700 record set in December 2017.
Past data shows that if the rally continues Bitcoin will be past the $20,000 mark in “within the next 7-14 days”, according to Simon Peters, an analyst for eToro.
Yet, the cryptocurrency market is notoriously known for its volatility, and while June has been kind to its investors, is the latest run expected to end with another catastrophic crash?
Facebook Libra or something more?
The recent gains achieved by Bitcoin coincide with the announcement of Facebook’s cryptocurrency, Libra. The price sat around the $9,000 mark on Tuesday, 18 June, and has jumped by more than 40% since.
With some 2.4 billion monthly active users – more than a quarter of the world’s population – Facebook has helped to put cryptocurrency back in front of the masses, and that amount of exposure could push Bitcoin to new heights.
“I wouldn’t be surprised if the price of Bitcoin continues to rise, simply because the launch of Facebook’s Libra has raised greater awareness of Bitcoin and cryptocurrency more broadly,” Sukhi Jutla, co-founder of MarketOrders, told Verdict.
However, many feel that the recent gains are less to do with Facebook’s announcement, and merely a continuation of what has been a positive year for the cryptocurrency so far.
Prior to the Libra unveiling, Bitcoin had already surged by more than 130% since the start of the year, and there are some good signs that this is less to do with those searching for a get-rich-quick scheme buying into the Bitcoin hype and more to do with genuine investment from institutions.
“Looking at historic Google Trends data, the search terms for ‘buy Bitcoin’ have typically spiked with the price as new retail investors jumped on the train,” Peters explained. “The fact that trends data hasn’t spiked with price on this occasion suggests that new capital is instead coming from institutions, which bodes well for the long term,”
Positive predictions for the Bitcoin price
Hearings on Libra organised by the Senate banking committee and United States House Financial Services Committee, scheduled for the 16th and 17th July, will provide a clearer indication of Facebook’s role in the recent Bitcoin price surge, according to Samuel Leach, Director of Samuel and Co Trading.
Good news for Facebook and its ambition to introduce the world to crypto payments could push the Bitcoin prices up higher. Bad news for Facebook, particularly in the form of dissatisfaction from lawmakers, could have the opposite effect. Or, if Bitcoin’s surge isn’t as closely tied of Libra as it appears to be, it could have no impact at all.
Regardless, analysts seem positive that Bitcoin’s positive run will stretch beyond June.
Leach believes that Bitcoin will go to $15,000-$17,500, while Jutla believes that the $20,000 mark will “definitely” be reached. Peters is a little more ambitious in his estimates, believing Bitcoin prices could reach as high as $100,000 by the end of the year.
Haven’t we been here before?
Analysts were making six figure predictions the last time Bitcoin was rallying like this too. Yet, rather than achieving 400% growth throughout 2018, Bitcoin has instead lost 80% of its value by the end of the year.
Its resurgence is promising for investors and potentially lucrative for those that invested in Bitcoin back in February. However, even when the price is moving in the right direction, such sudden jumps are still a sign of Bitcoin’s volatility.
Things are going well for Bitcoin right now, but for serious investors it’s still a question of when, rather than if, prices will fall again.
“We have been here before with Bitcoin, with impressive rallies and savage drops, and the current rebound should revive interest in cryptos, at least until the next big selloff,” Chris Beauchamp, chief market analyst at IG, told Verdict.
Prices are increasing because people are buying, but with crypto prices heading towards the kind of values where traders would be likely to sell up (much like the $20,000 mark in 2017), we could see a reversal “very soon”, according to Peters.
Cryptocurrencies like Bitcoin may have survived a difficult 2018, but according to American economist Tim Kane, this Facebook’s Libra announcement and the subsequent rally has merely delayed the “inevitable demise” of cryptocurrencies that aren’t pegged to gold or fiat currencies.
Yet, while it might be its saviour now, it could also end up being the Bitcoin killer that many have predicted.
“The inevitable demise of unstable cryptocurrencies that are unpegged to gold or the dollar is all but certain in the long run. ” Kane told Verdict.
“Bitcoin is a mania, Libra is a money. Wise traders know the difference: that money can be used as a medium of exchange for real goods, not as a speculative investment,”
“So sell your tulips soon, just not too soon, right?”